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Level 1

Inherited IRA RMD 5yr rule reporting RMD

I have an inherited IRA, and I plan to withdraw the money under the 5 yr rule (which I understand as requiring me to withdraw all money within 5 years to avoid penalties). I calculated the amount I could withdraw (take as a distribution) in 2019 while remaining in my current tax bracket. I believe that amount exceeds what would have been "required." 

 

 On the 1099-R, there is a question of whether the full gross of the distribution should be considered the RMD, or only part of the distribution. I cannot find any guidance about this question. Is there a reason the full gross should NOT be the RMD?

 

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Level 15

Inherited IRA RMD 5yr rule reporting RMD

The RMD question is asking how much of the distribution was RMD is used only to determine the amount that is eligible for rollover, not for determining any penalty; the question is actually asking how much of the distribution is not eligible for rollover.  In the case of a non-spouse beneficiary, it is all ineligible for rollover, all RMD.  If you didn't roll over any of this distribution, it doesn't matter how you answer this question.

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Expert Alumni

Inherited IRA RMD 5yr rule reporting RMD

Since you chose to use the 5 year rule, any amount you take out will exceed the RMD.

 

The IRS wants to make sure you take out the Required Minimum. There is a penalty if you do not take out the RMD. Since the goal is to fine you for not taking the minimum, any answer that ensures there is no penalty, is fine.

 

A safe answer is yes, it was all RMD. This simply translates into the software that you do not owe a penalty. Nowhere does it mark that it was all RMD to the IRS.

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Highlighted
Level 15

Inherited IRA RMD 5yr rule reporting RMD

The RMD question is asking how much of the distribution was RMD is used only to determine the amount that is eligible for rollover, not for determining any penalty; the question is actually asking how much of the distribution is not eligible for rollover.  In the case of a non-spouse beneficiary, it is all ineligible for rollover, all RMD.  If you didn't roll over any of this distribution, it doesn't matter how you answer this question.

View solution in original post